Verslas: Teorija ir praktika / Business: Theory and Practice

Issn 1648-0627 / eIssn 1822-4202

http://www.btp.vgtu.lt
2016 17(2): 178–189
doi:10.3846/btp.2016.651

THE IMPACT OF EMPLOYEE EMPOWERMENT ON EMPLOYEE SATISFACTION

AND SERVICE QUALITY: EMPIRICAL EVIDENCE FROM FINANCIAL
ENTERPRIZES IN BANGLADESH

Minhajul Islam UKIL

Department of Management, University of Dhaka, Dhaka-1000, Bangladesh

E-mail: minhaj6ukl@hotmail.com

Received 22 May 2015; accepted 13 March 2016

Abstract. Organizations face immense challenges in improving their performance and productivity in the present changing and
competitive business world. Experts view employee empowerment as an effective tool that fosters organizational performance,
employee satisfaction and service quality. The present study intends to identify the influence of employee empowerment on
employee satisfaction and service quality, and the impact of employee satisfaction on service quality. Fourteen dimensions and 52
item statements of employee empowerment, service quality and employee satisfaction have been adopted from previous studies
to undertake this study. Data have been gathered following a quantitative survey conducted among a diverse group of employees
(N = 240) working in 20 different financial institutions including private banks, leasing and insurance companies in Bangladesh.
Several statistical techniques consisting of descriptive analysis, Pearson correlations and regression analysis have been applied
using SPSS software to analyze collected data. The results of the statistical analysis reveal that employee satisfaction and service
quality significantly depend on employee empowerment, and satisfied employees provide better quality service. The findings of
this research have explicit implications for both the employees and the organizations. This study suggests that by empowering
employees, an organization can increase the level of employee satisfaction that in consequence upturns service quality.

Keywords: employee empowerment, employee satisfaction, psychological empowerment, service quality, structural empower-
ment.

JEL Classification: M12, O15.

Introduction of control on job, vague and meaningless responsibility,

Responding to the constant changing trend of global busi-
ness atmosphere is perhaps the most substantial concern
for both the people and the organizations. In order to react
to the changes and diverse requirements of customers and
stakeholders, employees are to face numerous challenges in
steering their performance. Employees frequently struggle
to seize and restrain their managerial authority (Checkland
2004) to encounter those challenges. One of the core chal-
lenges for enterprizes in this epoch of globalization is to
provide prompt responses to the customers to make them
satisfied, and to increase productivity. Nonetheless, poor
organizational arrangements like Lack of authority to make
work-related decisions, limited access of information, lack
and improper reward system often make the jobs difficult
for the employees and reduce the quality of service, which
ultimately lead to customer dissatisfaction. So as to make
the customers satisfied and enhance organizational per-
formance, organizations need to give employees enough
authority and support.
The tenacious movement of the human relations stee-
red the experts to integrate various strategies that can de-
liver the greatest performance in their human resources
(Sharma, Kaur 2011). These strategies involve a set of diver-
se forms e.g. industrial democracy, employee participation
and managerial compliance. Internal settings like organi-
zational structure and employee participation are the key

Copyright © 2016 The Authors. Published by VGTU Press.

This is an open-access article distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 (CC BY-NC 4.0) license, which
permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. The material cannot be
used for commercial purposes.
To link to this article: http://dx.doi.org/10.3846/btp.2016.651
Business: Theory and Practice, 2016, 17(2): 178–189 179
determinants of an organization, which affects employee
performance. Endless debates have emerged in how the
performance of an organization, and the satisfaction level
of its employees and customers can be improved. Brown and
Harvey (2006) state employee empowerment, comparative-
ly a new technique, which makes the employees proactive
and self-sufficient helps in mounting the performance of
employees and organizations (p. 267). Employee empo-
werment is very crucial for the survival and success of an
organization, and it gives employees a sense of feelings that
they are the core assets to the organizational success, creates
commitment and a sense of belonging, builds trust, promo-
tes effective communication, and increases organizational
effectiveness and employee wellbeing (Ongori 2009).
Experts upturn huge controversy in their studies and
opinions whether employee empowerment supports or
injures an organization. Karakoc and Yilmaz (2009) views
employee empowerment as one of the most effective means
of allowing employees at every level to utilize their crea-
tive thinking and abilities to improve the quality of their
work and the performance of the organization. The study of
Ugboro and Obeng (2000) endorses significant correlation
between employee empowerment and customer satisfaction
or employee job satisfaction. Opponent suggests (Locke
et al. 1986) employee empowerment essentially in many
cases downsizes productivity and lowers employee satis-
faction. Mills and Ungson (2003) move a step further and
advocate employee empowerment produces an agency pro-
blem and may cause complete disaster for the organizations.
Researchers and scholars though have different views and
opinions in empowering employees and its consequences,
enterprizes start realizing that employee empowerment can
make difference between their success and failure in the
long run (Brown, Harvey 2006: 267). Many organizations
consider that empowering thier employees will eventually
direct to higher profitability and greater customer satis-
faction (Sternberg 1992).
Organizations can be more effective in the contem-
porary competitive market by improving service quality
(Zeithaml et  al. 2006:106). However, employees cannot
act properly and make the customers delighted if they lack
sufficient information and clear role clarification to deliver
superior service (Melhem 2004). Employees in various or-
ganizations perceive insufficient autonomy and authority
to make decision so as to respond quickly to customers, and
thus organizations fail to retain customers as a consequ-
ence. Lack of information, authority and autonomy in the
one hand not only interrupt prompt services but also lower
employee satisfaction. Employee empowerment on the ot-
her hand leads to higher job satisfaction and fosters quick
delivery of service to the customers (Fulford, Enz 1995).
Empowerment delegates authority to an organization’s lo-
west level in order to make competent decisions (Conger,
Kanungo 1988; Thomas, Velthouse 1990), and increases in-
trinsic motivation of the employees and upturn individual
performance (Spreitzer 1995). Employee empowerment
involves the necessary background of providing tools, and
training, encouraging and motivating the employees of an
organization for ensuring sustainable performance. It fa-
cilitates the construction of a complete quality setting that
benefits an organization to produce quality products and
services (Kahreh et al. 2011).
Although empowerment gives the employees authority
and makes them confident to deliver their best and thus
service quality increases, employees in different organi-
zations seldom enjoy autonomy and power necessary to
perform certain tasks, which cause severe consequences for
the enterprizes (Coulthard 2014; Wojcik 1999). Employees
desiderate sense of belongingness and attachment to the
organizations due to lack of empowerment including insi-
gnificant authority, noninvolvement in organizational de-
cision-making, meaningless job, poor salary structure and
low status (Ahmed 2013; Dawson 1989), which greatly inf-
luence overall satisfaction of the employees and their offered
services. The present study therefore, intends to determine
how employee empowerment affects employee satisfaction
and service quality as a whole. The aim of this research is
to depict the need for empowering employees in business
organizations in Bangladesh. The specific objectives of this
study have been determined as follows.
− To determine the perception of employees about
employee empowerment.
− To investigate the impact of employee empowerment
on employee satisfaction.
− To examine the impact of employee empowerment
on service quality.
− To ascertain the impact of employee satisfaction on
service quality.
1. Literature review and hypotheses
Widmier and Silvestro absorbed (in Timothy, Abubaker
2013) two fundamental disputes for managing people: (a)
the employees should be supervised carefully and suppor-
ted with corrective actions where necessary, and (b) the
employees should be given responsibility for regulating
their own activities, which can be termed as employee em-
powerment. Empowerment does not mean power itself;
it is simply a process by which power is only imparted
for a drive or to an end. The key to empowerment is the
delegation of authority in lower levels and engaging all
employees in decision-making, which leads to improve the
sense of pride, self-esteem and responsibility of the emplo-
yees (Brown, Harvey 2006: 267). Employee engagement in
management assists in increasing the quality, efficiency and
organizational competiveness (Durai 2010: 421).
180 M. I. Ukil. The impact of employee empowerment on employee satisfaction and service quality: empirical evidence...
Brown and Harvey (2006) define employee empower-
ment as a process of giving staffs or employees the autho-
rity or power to make decisions about their own job (p.
267). According to Gill (2011), employee empowerment
refers to the meaningful job of employees, their feelings of
competence, autonomy, and contribution to the decision-
making or applications of leadership (p. 233). The emplo-
yee empowerment concept actually certifies the employees
with necessary power to employ plan and judgment in their
work, participate in their work related decision-making, and
authorizes them to respond quickly to the needs and con-
cerns of the customers (Durai 2010: 432). Blanchard et al.
argues (in Ongori 2009) that empowerment refers not only
to have power or authority to make decision and act, but
also to have higher level of responsibility and accountability.
Demirci and Erbas (2010) calls employee empowerment a
unique style of management where managers confer about
various work related issues and activities with the employees
of the organization.
Randolph (1995) perhaps offers the simplest definition
of employee empowerment, and views employee empower-
ment as a process of transferring power from the employer
to the employees. This transformation of power benefits
organizations in many forms. According to Grönroos
(2001: 347–348), employee empowerment ensures more
direct and quicker response to customer requirements, as-
sists in service recovery and makes the employees satisfied.
Researchers explain employee empowerment from different
viewpoint. Ghosh (2013) argues employee empowerment
emerges from four different perspectives: social, psycho-
logical, growth and organizational. Kahreh et  al. (2011)
describes employee empowerment from psychological and
employment climate perspectives. Bekker and Crous (1998)
state three perspectives of employee empowerment namely
organizational, individual, and training and development.
According to Lee and Koh (2001), and Zeglat et al. (2014),
psychological and structural/ relational empowerments are
the most common forms of employee empowerment. Scott
and Jaffe (1992) claim individual perspective (subjective
dimension) of empowerment should be emphasized, in
which the aspects include motivation, commitment, locus
of control and authority.
Demirci and Erbas (2010) reason that empowerment
is formulated (Fig. 1) by the combination of four compo-
nents: power, information, knowledge and rewards. Power
refers to the ability of getting things completed (Kanter
1993: 166). Power is concerned with the autonomy, dele-
gation and authority given to the employees. Information
encompasses the employees’ access to the data related to
the organizational objectives and strategy, and active en-
gagement in the process of decision-making (Vacharakiat
2008). Information also includes clarification of individual
role and feedback obtained from manager, subordinates
and peers. Sharing of knowledge is a group process where
employees share relevant information, knowledge and ideas
regarding their work (Yasothai et al. 2015). Reward indicates
the monetary or non-monetary benefits that an employee
receives, which is considered an effective tool to increase
employee motivation (Yasothai et al. 2015).
Empowerment =
Power × Information × Knowledge × Rewards
Power Information Knowledge Rewards
Autonomy Feedback Training Compensation
Role
Authority Counseling Career planning
clarification
Delegation Motivation Appraisal Job enrichment
Fig. 1. Instruments of empowerment
(source: Demirci, Erbas 2010)
Thomas and Velthouse (1990), and Spreitzer (1995)
pay much attention on the psychological empowerment.
Psychological empowerment refers to a set of motivatio-
nal consciousness constituted by work setting, and reflects
the active orientation of an employee to his or her job role
(Spreitzer 1995). Psychological empowerment is the exten-
ded motivation of intrinsic task constructed on the basis of
four perceptions: meaning, competence, self-determination
and impact that reflect the orientation of an individual to his
work activities (Thomas, Velthouse 1990). Meaning refers
to the internal interest of an individual in the job or task
that needs to be valued, relevant and ideal with individual
standards (Thomas, Velthouse 1990). Competence, also
known as self-efficacy, is the individual belief or confidence
about his or her capability of doing certain tasks (Spreitzer
1995; Salajegheh, Pirmoradi 2014). Self-determination is
the deliberate and voluntary involvement of employees in
the task process, and perceived freedom in making their
work-related decision (Spreitzer 1995), which creates sense
of ownership and responsibility among employees about
their undertakings (Little 2007). Impact indicates the extent
of influence of an employee on end results in the organi-
zational work mechanism (Vacharakiat 2008).
Employee satisfaction, also known as job satisfaction, is
a positive emotional state that demonstrates the perceived
relationship between the expectation of an employee from
his job and his perceived offerings of the job (Locke 1976).
Service is an act or representation that one party ushered
to another, basically intangible and does not result in the
ownership of anything, and its production may or may
not be related to a physical product (Kotler, Keller 2012).
Service quality refers to the result from customer judgments
between their desired service and their perceptions about
the service (Oliver 1977). In another word, service quali-
ty is the perceived quality as a mode of attitude in which
Business: Theory and Practice, 2016, 17(2): 178–189 181

the customers shape a long-run assessment (Parasuraman

et al. 1988; Cronin, Taylor 1992; Grönroos 2001; Looy et al.
2003). Parasuraman et al. (1988) developed a model namely
service quality model that consist of five dimensions: tan-
gibles, reliability, responsiveness, assurance and empathy.
Tangibles refer to the appearances of physical facilities, per-
sonnel, equipment and communication materials (Kotler,
Keller 2012). Reliability indicates the ability of employees to
perform consistently and accurately (Zeithaml et al. 2006). Fig. 2. Research framework
Responsiveness is the willingness to assist customers and
offer quick service (Kotler, Keller 2012). Assurance is the
realization and courtesy of workers and their capability to of the provided service quality and the overall satisfaction
express confidence and trust (Kotler, Keller 2012). Empathy of the customers’ experiences (Zeithaml et al. 2006: 106).
refers to caring and individualized attention to customers Organizations can choose any of the two approaches that
(Kotler, Keller 2012: 374). can foster service quality: the production line approach
Based on the above discussions, the research model and empowerment approach (Looy et al. 2003: 231). Sparks
below has been sketched. The model illustrates projected et al. (1997) exposes that completely empowered employees
relationships between variables of three hypotheses discus- generate higher satisfaction to the customer. Hocutt and
sed in the following sections. Stone (1998) figure out high level of customer satisfaction
where employees work with responsibility and enthusiasm.
1.1. Employee empowerment versus Saif and Saleh (2013) view employee empowerment as one
employee satisfaction of the foremost rudiments for continuous improvement of
the quality of products and services. The study of Timothy
Number of studies (Thomas, Tymon 1994; Ugboro, Obeng
and Abubaker (2013) endorse affirmative and significant
2000) revealed significant relationship between employee
impact of employee empowerment on service quality (Tsaur
empowerment and employee satisfaction. Klagge (1998)
et al. 2004), and reveals employee empowerment improves
advocates employee empowerment benefits both the em-
service quality. Large enterprizes like Federal Express and
ployees and the organization. Some researchers (Ugboro,
U.S. Air empowered their employees to satisfy customers
Obeng 2000; Bailey 2009: 1; GanjiNia et al. 2013) argue
by further their service quality (Zemke, Schaaf 1989).
that employee empowerment is one of the most effective
Numerous studies found significant relationship between
techniques to improve employee satisfaction, morale and
employee empowerment and service quality. Therefore, the
motivation of the employee. Thomas and Tymon (1994)
following hypothesis has been projected.
reason that empowerment manifests higher degree of job
satisfaction. Yasothai et al. (2015) states employee empo-
Hypothesis 2: Employee empowerment positively leads
werment constructs vital impact on employee satisfaction.
to service quality.
Since empowerment improves employees’ motivation, job
satisfaction and dedication to their work and organization,
1.3. Employee satisfaction versus service quality
these activities influence fewer job switching and enhanced
employee retention rates, consequently decrease employee Wagner and Herter (2006) advocate that highly satisfied
turnover expenses (Wagner, Herter 2006). Thus, it can be employees demonstrate higher level of loyalty to the orga-
said that employee empowerment has profound contri- nization. Though some studies (Iaffaldano, Mucinsky 1985)
bution to make employees satisfied, and on the basis of denied the correlation between employee satisfaction and
the above evidences, the following hypothesis has been performance, several studies (Bhagat 1982; Petty et al. 1984)
developed. found significant correlation between employee satisfaction
and performance. The quality of service offered by satisfied
Hypothesis 1: Employee empowerment positively leads to employees tends to be better, decreases the figure of product
employee satisfaction. defects and unusual service issues, which lead in escalating
productivity of the workers and the organization. Thus, the
1.2. Employee empowerment versus service quality following hypothesis has been established for empirical
assessment.
Providing high quality service is a key concern for en-
terprizes, and Oliver (1997) argues that customer satis-
Hypothesis 3: Employee Satisfaction positively leads to
faction mostly depends on the quality of service offered.
service quality.
Perceived customer service can be identified only in terms
182 M. I. Ukil. The impact of employee empowerment on employee satisfaction and service quality: empirical evidence...

2. Research methodology 2.2. Measures and instruments

2.1. Sample and data collection Aiming to maintain consistency with the earlier studies,
the questionnaire has been designed based on the measures
Data have been collected through a quantitative survey
of the previous studies. The instruments of this study have
from 240 employees working in 20 different private finan-
been divided into two segments: one segment has been
cial enterprizes in Bangladesh comprising bank, leasing
devised for collecting demographic information of the res-
and insurance companies. The survey questionnaires have
pondents and another one for measuring the perceptions of
mostly been distributed manually to the target people. In
independent and dependent variables under investigation.
addition to that, e-mail has also been used to disseminate
A total of 52 items has been used in this study. In terms of
the questionnaire to some of the respondents. Around 300
measuring all of these 52 items, a 5-point Likert scale has
hundred questionnaires have been distributed among the
been used with an interval scale ranging from 1 (strongly
employees of 22 different organizations. A total of 242 peo-
disagree) to 5 (strongly agree).
ple of 20 financial firms returned their answers whereas 240
Employee empowerment has been measured by in-
data were considered usable in which only 14 of them are
vestigating eight dimensions that have been emerged in
females, which represents 5.83% of the total respondents.
the literature: power, knowledge, information and reward
The respondents were picked following simple random
(Demirci, Erbas 2010; Yasothai et al. 2015), and meaning,
sampling method (Zikmund et al. 2013). Approximately
competence, self-determination and impact (Spreitzer
two third (66.25%) of the respondents are married. The
1995). The twelve-items of power (e.g. I have authority to
leading cluster of respondents falls under the ages ranging
make autonomous decisions in my job), knowledge (e.g.
from 26 to 30 and the smallest group of respondents be-
Knowledge sharing would improve work processes in the
longs under the ages ranging from 21 to 25, which repre-
organization), information (e.g. I have access to the infor-
sent 42.08% and 5.42% of total respondents respectively.
mation we need to perform our job) and reward (e.g. I am
The highest education level of vast majority (57.50) of the
satisfied with the reward systems that I receive) have been
respondents is postgraduate. 5% of the respondents have
adapted from the study of Yasothai et al. (2015). Another
professional degree. The profile of the respondents has been
twelve-items statements of meaning (e.g. The work I do is
exhibited in Table 1.
very important to me), competence (e.g. I am confident
about my ability to do my job), self-determination (e.g. I
Table 1. Sample characteristics
have significant autonomy in determining how to do my
Characteristics Category Frequency % job) and impact (e.g. I have great deal of control over what
Male 226 94.2 happens to m work) have directly taken from the study of
Spreitzer (1995).
Sex Female 14 5.8
Service quality has been analyzed with the five dimen-
Total 240 100 sions of service quality (SERVQUAL) model originated
21–25 13 5.4 by Parasuraman et  al. (1988). The twenty two-items of
26–30 101 42.1 SERVQUAL scale for tangibles (e.g. Should have up to date
equipment), reliability (e.g. Should do things by the time
Age range 31–35 75 31.2
they promise), responsiveness (e.g. Not realistic for custo-
(in years) 36–40 35 14.6 mers to expect prompt service), assurance (e.g. Employees
41–45 16 6.7 should get adequate support to do their job well) and empat-
Total 240 100 hy (e.g. Employees should not be expected to give customers
individual attention) quality are directly adopted from the
Unmarried 81 33.8
SERVQUAL model of Parasuraman et al. (1988) of which
Marital status Married 159 66.2 four-items responsiveness quality and five-items empathy
Total 240 100 quality are reverse coded. In order to measure employee sa-
Diploma 27 11.2 tisfaction, the six-items job satisfaction index (JSI) has been
adopted from the study of Schriesheim and Tsui (1980). The
Bachelor 63 26.3
JSI consists of six single-item statements (e.g. I am satisfied
Educational Post with the nature of the work I perform, I am satisfied with
138 57.5
level Graduate the person who supervises me) that measure the nature of
Professional 12 5.0 work, supervision, compensation, relationship with collea-
Total 240 100 gues, promotion opportunities and overall job satisfaction.
A higher score of JSI indicates greater job satisfaction.
Business: Theory and Practice, 2016, 17(2): 178–189 183

2.3. Data analysis techniques Table 2. Scores of mean, standard deviation

and Cronbach’s Alpha
The primary data have been analyzed employing ver-
sion 22.00 of SPSS (Statistical Package of Social Science) No. of
Dimensions Mean S. D. Alpha
items
software for MAC. A set of statistical techniques including
descriptive analysis, correlation coefficient and regres- Employee
3.591 0.346 0.821 24
empowerment
sion analysis has been applied to analyze the gathered
data. Simple regression has been applied to test the three 1. Power 3.461 0.736 0.789 3
hypotheses, and multiple regressions have been used to 2. Knowledge 3.843 0.687 0.767 3
test the hypotheses for eight dimensions of employee em- 3. Information 3.789 0.752 0.805 3
powerment to employee satisfaction. The reliability of 4. Reward 3.747 0.841 0.824 3
measures has been instituted by calculating the values of 5. Meaning 3.951 0.766 0.846 3
Cronbach’s alpha coefficient. Each of the 14 dimensions 6. Competence 3.449 0.473 0.668 3
of this study has produced pretty acceptable alpha va-
7. Self-deter­
lue varying between 0.601 and 0.928. Hair et al. (1998) 3.289 0.478 0.767 3
mination
advocates that if the items are articulated for the research 8. Impact 3.196 0.352 0.618 3
context, the alpha value of 0.60 is acceptable. The values
Service quality 3.526 0.275 0.771 22
of alpha coefficient have been exhibited in Table 2. The
9. Tangibles 3.598 0.458 0.743 4
scores of mean and standard deviation have also been
presented in Table 2. 10. Reliability 3.530 0.335 0.601 5
11. Respon­
3.632 0.427 0.675 4
siveness
3. Results
12. Assurance 3.571 0.365 0.607 4
3.1. Descriptive and reliability analysis 13. Empathy 3.301 0.577 0.638 5
The scores of mean, standard deviation and Cronbach’s 14. Employee
3.477 0.791 0.928 6
alpha are summarized in the following table (Table 2). satisfaction
The table also displays the number of items used for me-
asuring the mean, standard deviation and alpha scores
of each dimension. According to Table 2, the values of are reportedly high. Apart from these, job is meaningful to
Cronbach’s alpha for overall employee empowerment and the respondents and they are quite happy with the reward
service quality measures are 0.821 and 0.771 respectively. system, since the mean scores of reward (Mean: 3.747, SD:
The Cronbach’s alpha for employee satisfaction is 0.928. 0.841) and meaning (Mean: 3.951, SD: 0.766) dimensions
Meaning (0.846) has the highest and impact (0.618) has the are relatively high.
lowest score of Cronbach’s alpha among eight dimensions of
employee empowerment. The highest value of Cronbach’s 3.2. Correlations statement
alpha among the service quality dimensions is represented Pearson correlations have been tested in order to deter-
by tangibles (0.743). The reliability (0.601) dimension of mine the typical relationships among variables under
service quality holds the lowest Cronbach’s alpha score in investigation. The results of Pearson correlations on each
the entire data set. dimension of employee empowerment and service qua-
The statistics in Table 2 further show that the mean lity, and employee satisfaction are displayed in the table
scores of all 14 dimensions are almost in between 3 to 4. below (Table 3).
Meaning (Mean: 3.951, SD: 0.766) has the highest mean As shown in Table 3, Pearson correlations established 51
score among employee empowerment dimensions and res- correlations altogether of which a vast majority of them are
ponsiveness (Mean: 3.632, SD: 0.427) has the highest mean positive. The power dimension of employee empowerment
score among service quality dimensions. Impact has the is significantly correlated with knowledge (0.364, p < 0.01),
lowest mean score (Mean: 3.196, SD: 0.352) among all di- information (0.254, p < 0.01), reward (0.284, p < 0.01) and
mensions. The findings also demonstrate the upper medium meaning (0.160, p < 0.05). The perception of knowledge is
level of employee empowerment and service quality, since highly correlated with information (0.395, p < 0.01), reward
the mean scores of overall employee empowerment and (0.255, p < 0.01) and meaning (0.259, p < 0.01). Information
service quality are 3.591 and 3.526 respectively. The level of is also considerably correlated with reward (0.573, p < 0.01)
employee satisfaction is higher medium with a mean score and meaning (0.249, p < 0.01), and reward is further si-
of 3.477. The findings further endorse a high level of know- gnificantly correlated with meaning (0.326, p < 0.01) and
ledge and information sharing among the employees, as the competence (0.147, p < 0.05). Six dimensions of emplo-
mean scores of knowledge (3.843) and information (3.789) yee empowerment consisting of power (0.427, p < 0.01),
184 M. I. Ukil. The impact of employee empowerment on employee satisfaction and service quality: empirical evidence...

knowledge (0.394, p < 0.01), information (0.549, p < 0.01),
reward (0.516, p < 0.01), meaning (0.147, p < 0.05) and
impact (0.138, p < 0.05) are significantly correlated with
employee satisfaction.
19 correlations are instigated between the dimensions
of employee empowerment and service quality. Power of
employee empowerment is statistically correlated with
tangibles (0.210, p < 0.01), reliability (0.236, p < 0.001),
responsiveness (0.194, p < 0.01) and assurance (0.173, p <
0.01) of service quality. The perceptions of Information, re-
ward and meaning are also significantly related to tangibles,
reliability, responsiveness and assurance. Impact of emplo-
yee empowerment is negatively correlated with tangibles
(–0.135, p < 0.05) and responsiveness (–0.180, p < 0.05) of
service quality. Competence is somewhat correlated with
tangibles (0.141, p < 0.05) while self-determination of em-
ployee empowerment has no correlation. Tangibles (0.51,
p < 0.05), reliability (0.333, p < 0.01), assurance (0.301, p <
0.01) and empathy (0.180, p < 0.01) of service quality are
also positively correlated with employee satisfaction.
3.3. Results of hypotheses testing
Two forms of regressions have been used to accomplish
the current study. Simple regression was used to measure
the impact of employee empowerment on employee sa-
tisfaction and service quality, and the impact of emplo-
yee satisfaction on service quality as displayed in Table 4.
Multiple regressions were applied to measure the separate
impact of eight dimensions of employee empowerment on
employee satisfaction as exhibited in Table 5.
As the results shown in Table 4, simple regression re-
veals that employee empowerment is significantly related
to employee satisfaction (β = 0.576, Sig = 0.000, p < 0.01).
Hence, the hypothesis 1 is supported in which employee
empowerment positively leads of employee satisfaction.
The impact of this relationship is quite high as the value
of R2 is 0.331, which indicates that employee empower-
ment predicts and interprets 33% of employee satisfaction.
Table  4 further illustrates that the hypothesis 2 is also
accepted, as there is significant relationship evidenced
in between employee empowerment and service quality

Table 3. Correlations statement

1 2 3 4 5 6 7 8 9 10 11 12 13
Employee empowerment
1. Power
2. Knowledge .364**
3. Information .254** .395**
4. Reward .284** .255** .573**
5. Meaning .160* .259** .249** .326**
6. Competence –0.026 –0.024 0.099 .147* 0.008
7. Self-deter­
0.084 0.123 0.072 0.005 0.113 0.023
mination
8. Impact 0.074 .141* –0.001 –0.066 0.11 –0.103 .207**
Service quality
9. Tangibles .210** 0.038 .334** .377** .283** .141* –0.009 –.135*
10. Reliability .236** .175** .257** .348** .155* 0.034 0.094 0.001 .204**
11. Respon­
.194** 0.027 .260** .340** .248** 0.125 –0.026 –.180** .895** .165*
siveness
12. Assurance .173** .138* .235** .317** .137* 0.06 –0.01 –0.051 .193** .779** 0.124
13. Empathy 0.114 0.02 0.018 0.049 0.054 –0.016 0.063 .132* 0.091 .136* 0.058 0.091
14. Employee
.427** .394** .549** .516** .147* –0.067 0.069 .138* .151* .333** 0.103 .301** .180**
satisfaction
* Correlation is significant at the 0.05 level (2-tailed). ** Correlation is significant at the 0.01 level (2-tailed).

Table 4. Summary of simple regression analysis

Hypotheses Independent variable Dependent variable R2 Beta Sig Result
H1 Employee empowerment Employee satisfaction 0.332 0.576 0.000 Accepted
H2 Employee empowerment Service quality 0.167 0.408 0.000 Accepted
H3 Employee satisfaction Service quality 0.102 0.319 0.000 Accepted
Business: Theory and Practice, 2016, 17(2): 178–189 185
Table 5. Summary of multiple regressions analysis
Independent variable Dimensions Dependent variable
Power
Knowledge
Information
Employee Reward
Employee satisfaction
empowerment Meaning
Competence
Self-determination
Impact
(β = 0.408, Sig = 0.000, p < 0.01). The results of simple
regression (Table 4) further suggests that employee sa-
tisfaction is significantly related to service quality (β =
0.319, Sig = 0.000, p < 0.01), and thus the hypothesis 3 is
supported as well in which highly satisfied employees offer
better service quality. The R2 value of this relationship is
0.102, which signifies that employee satisfaction predicts
and explains around 10% of service quality.
The results of multiple regressions presented in Table 5
indicate significant impact of seven dimensions of emplo-
yee empowerment such as power (β = 0.222, Sig = 0.000,
p < 0.001), knowledge (β = 0.120, Sig = 0.031, p < 0.05),
information (β = 0.308, Sig = 0.000, p  <  0.001), reward
(β = 0.308, Sig = 0.000, p < 0.001), meaning (β = –0.109,
Sig = 0.035, p < 0.05), competence (β = –0.120, Sig = 0.014,
p < 0.05) and impact (β = 0.125, Sig = 0.012, p < 0.05) on
employee satisfaction. Self-determination, in other hand,
has no significant impact on employee satisfaction.
4. Discussion
The mean scores of overall employee empowerment and its
eight dimensions (Table 2) suggest that the perception level
regarding employee empowerment of employees working
in financial organizations in Bangladesh is high, which
indicates that employees have given greater importance
to empowerment. For hypothesis 1, the results of simple
regression analysis revealed positive and significant corre-
lation between employee empowerment and employee sa-
tisfaction. The significant level between these two variables
is 0.000, which indicates that the relationship between the
independent and dependent variables is highly significant.
This result endorses earlier studies of Wagner and Herter
(2006), Hunjra et al. (2011) and Yasothai et al. (2015), which
advocate that empowering employees upturns employee
satisfaction. Pelit et al. (2011) also found that employee
empowerment affects job satisfaction.
The relationship between employee empowerment and
employee satisfaction is also tested in relation to the eight
dimensions of employee empowerment (shown in Table 5),
R2 Beta Sig Result
0.222 0.000 Significant impact
0.120 0.031 Significant impact
0.308 0.000 Significant impact
0.308 0.000 Significant impact
0.479
–0.109 0.035 Significant impact
–0.120 0.014 Significant impact
0.001 0.979 Insignificant impact
0.125 0.012 Significant impact
which exposed significant and positive correlation between
seven dimensions such as power, knowledge, information,
reward, meaning, competence and impact of employee
empowerment and employee satisfaction. Although the
study of Spreitzer et al. (1997) denied the effect of impact
on job satisfaction, Thomas and Tymon (1994) found an af-
firmative relationship between impact and job satisfaction.
Bendaravičienė and Bakanauskienė (2012) conducted a stu-
dy on university employees’ job satisfaction in Lithuania
and established significant correlation between reward or
recognition and employee satisfaction. In addition to that,
Table 3 of Correlation statement illustrates that employee sa-
tisfaction largely depends on several attributes of employee
empowerment such as power, knowledge, information, re-
ward, meaning and impact. This means the employees who
are given authority and autonomy, shared the information
related to the goals and strategies, involved in decision-
making, are happy with the organization’s reward system,
offered meaningful job and have much control over their
job, are satisfied.
Many organizations exercise empowerment as an
effective device to motivate workers for their development
and growth (Ghosh 2013). Gallup study suggests organi-
zations, of which the employees are more engaged and em-
powered, gain 27% higher margins and enjoy 50% greater
customer loyalty (Wagner, Herter 2006). In Toyota, some
employees are empowered in product assembling, and a
survey regarding job satisfaction revealed an affirmative
answer rate of more than 70% (Elnaga, Imran 2014). The
study of Kirkman and Rosen (1999) suggests the level of
job satisfaction and commitment to the organization of the
employees are reasonably high, who are empowered and has
autonomy in making their work related decisions.
Regarding the second hypothesis of this study, the
outcomes of simple regression analysis found significant
correlation between employee empowerment and service
quality, where the significance level of independent and
dependent variable is 0.000. Moreover, the correlation
statement displayed in Table  3 evidences that tangibles
dimension of service quality is positively correlated with
186 M. I. Ukil. The impact of employee empowerment on employee satisfaction and service quality: empirical evidence...
power, information, reward, meaning and impact of em-
ployee empowerment. Information, reward and meaning
and impact of employee empowerment are also positively
correlated with tangibles, reliability, responsiveness and
assurance of service quality. Therefore, hypothesis 2 is also
supported. The result of second hypothesis testing valida-
tes the findings of some other studies (Peters, Mazdarani
2008; Akanyako 2009; Timothy, Abubaker 2013). Peters
and Mazdarani (2008) uncovered that exercising emplo-
yee empowerment helps employees to respond quickly to
customers’ perception, which fosters the quality of service.
According to Akanyako (2009), the level of service quality
increases with the extent employees are empowered.
Results of regression analysis further revealed positive
and significant correlation between employee satisfaction
and service quality. The significant level of these two varia-
bles is 0.000, which implies that the relationship between
independent and dependent variable is highly significant.
The correlation statement (Table 3) illustrates that four di-
mensions of service quality such as tangibles, reliability,
assurance and empathy are significantly correlated with em-
ployee satisfaction. Thus hypothesis 3 is accepted. Although
some earlier studies (e.g. Mathieu, Zajac 1990) found insi-
gnificant impact of employee satisfaction on service quality,
the present study reveals significant relationship between
employee satisfaction and service quality. This result also
attested the outcome of some previous studies (Bhagat 1982;
Petty et al. 1984; Hartline, Ferrell 1996) which suggest that
employee satisfaction affects service quality. Researchers
also suggest that loyal employees make loyal customers
(Reichheld 1996) and dissatisfied employees seldom serve
the customers well (Hoffman 1992; Rogers et al. 1994). Yee
et al. (2008) also reported significant relationship between
employee satisfaction and service quality in the service firms
in Hong Kong.
Conclusions and further study
To serve the purpose of this study, three hypotheses have
been tested and verified. The aim of this study was to exa-
mine the effect of employee empowerment on employee
satisfaction and service quality, and the effect of employee
satisfaction on service quality. Employee empowerment is
getting much attention from both the individuals and orga-
nizations at present. This study revealed that employee em-
powerment has significant and positive impact on employee
satisfaction as well as service quality. The growing need of
coping with the diverse challenges admits organizations
to realize the essence of empowering employees and its
effect on quality of service and employee satisfaction. The
current research entails extensive implications for both the
organizations and their people. Regardless of flat or organic
structure of the organization, the present study suggests
employees should be given certain authority according to
the level and description of their job. Organizations need
to make a participative culture in the organization by sha-
ring vision, values and information with employees, giving
some autonomy, and allowing them to become a part in
decision-making.
Certain programs should be organized to better educate
the employees about the role and implementation of empo-
werment as well as to increase knowledge and skills required
to do their jobs. The current study also found that satisfied
employees provide better service to the customers. Thus,
according to the result of this research, organizations should
emphasize to make their employees satisfied. Organization
should give due importance on their reward systems, offer
promotion and advancement opportunities to the deserved
employees, and create an atmosphere where employees can
work as a team with fair cooperation with their colleagues.
In addition to that, supervisor’s role is very important.
Therefore, enterprizes should ensure that supervisors are
helping their subordinates where necessary.
This study concentrated only on employee perception.
Data have been collected from the employees working in
various financial institutions in Bangladesh. The relations-
hip between employee empowerment and service quality
has been measured based on the variables from employee
perspective. Future researchers have the scope of determi-
ning the relationship impact between employee empower-
ment and service quality from customer perspective as well.
Moreover, since the sample was just limited to financial
sector to carry out this research, study on other areas can
be done in future. This study found that empowered emplo-
yees are highly satisfied and offer better service. However,
there are many other organizational aspects that also help in
improving employee satisfaction and service quality. Thus,
future research can be conducted on other traits that upturn
employee satisfaction and service quality.
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Minhajul Islam Ukil has recently completed an MBA with major in Human Resource Management from the Department of
Management, University of Dhaka, Bangladesh. He holds a BBA from HAAGA-HELIA University of Applied Sciences, Helsinki,
Finland. Mr Ukil has publications in: Business Theory and Practice, Polish Journal of Management Studies, and Journal of Psycho-
logical and Educational Research. He also has three publications in international conference proceedings. His research areas include
entrepreneurship, organizational psychology and career management. His current research focuses on social entrepreneurship, and
role of university-based programs in creating entrepreneurial intention.